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The PIC - Connections

Page 3

Before the economy went global, America was the manufacturer, and the world was the market. American workers and businesses produced the goods and services and everyone else paid to get what we provided. For many years that was good for America. The other countries did not like that they were having to pay and pay and get nothing else in exchange for their wealth. American businesses created an environment of trade circumstances where they obtained a nation's raw resources and converted that dirt and rock into millions and billons of dollars.

In a move to appease the foreign populations who felt that America was enslaving them with debt and dependence on our production abilities, we started to migrate employment to them such that their standards of living increased and they were better able to purchase the things that they manufactured at such a low cost.

Some formerly domestic jobs relocated to South America, Asia , Japan and the SE Asian peninsula. These nations increased their abilities to manufacture large quantities of products that Americans love to buy. They continued to grow their industries to meet our product demands. Tens of millions of their people joined the ranks of the waged labor force and started up the socio-economic ladder from an agrarian to an industrial society.

These workforces provided what we wanted and we obliged them by buying it. The problem, however, is that our collective incomes could not sustain the trade deficits that built up their economies. Americans spend over 120% of earnings by supplementing it with debt. This is not debt just to make a large purchase possible today rather than after saving for years to buy it. This debt is an ever increasing unpaid balance that must be regularly restructured in order to avert imminent collapse.

Periodically, millions of Americans would look to the value of their principle residence to collateralize a new mortgage balance that folded in their unpaid credit purchases. House prices were increasing annually and lenders were eager to take upfront fees to restructure the agreements for higher principles and sometimes higher interest rates.